With gross margins heading to 60%, CMP is an exceedingly profitable company, it just needs the momentum in sales built up over the last couple of years to continue.
Per their guidance, they will do $4m to $5m EBITDA, that is AFTER expensing over $6m in R&D, so potentially $12m EBITDA pre R&D for FY15.
They have been consistently committing approx. 20% of revenues to R&D (twice the industry average). The result of all this R&D being that they are now in the strange situation that they have too many products coming through development than they know what to do with / how to commercialise.
Very much like WRR in that once the main seller has gone, the strong numbers mean that something has to give.
CMP Price at posting:
16.5¢ Sentiment: Hold Disclosure: Held
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